MultiFamily Conversion on RR 12

July 14, 2019

Written by

Josh Will

The Asset

We acquired the RR12 asset in June of 2018. Details of the property at the time of purchase:• Land: 3 acres• Improvements: 8 independent structures consisting of 7 Residential Units (Apartments) and 4 Office Units.

The Location

We were, and still are, very enthusiastic regarding the acquisition of this asset. The Asset is located along RR12, just 3 miles from Downtown San Marcos, Texas State University and 10 miles from Wimberly, TX. The Greater San Marcos Region is ideally located on the IH-35 corridor just 30 miles south of Austin and 40 miles north of San Antonio, two of the fastest growing MSAs in the United States and the fastest growing region in Texas. The Greater San Marcos Region represents the lower half of the Austin-Round Rock-San Marcos MSA, which includes all of Hays and Caldwell Counties.San Marcos is ranked as the fastest growing city in the U.S., and the Greater San Marcos Region is one of the fastest growing areas in the country. Texas has been ranked as the No. 1 state in the country for job growth over the past five years.In the immediate area, there are over 500 New Single Family Units Planned/Under Construction less than 2 miles away from the asset. RR12 is the main thorough-fair between San Marcos and Wimberly

THE BUSINESS PLAN

Our plan for the asset consists of raising rents to market and converting three of the office units into eight residential units. Through the conversion of the units, the monthly rent collected provides a 57%. Increase. We decided the ideal time for completion of the conversion was June/July; providing opportunity to lease the new units during the most active leasing season in San Marcos. At the same time, we would look to work with current residents to bring their rent up to market and provide them with the option of moving into a new home. At the end of year 1 of ownership, by following the plan, We have recognized a 31% increase in monthly cash flow.

THE CONVERSION:

We began work on the conversion in March 2019. The work consisted of converting over 3500 sqft of office space in 8 Residential Units. Some of the work included moving/removing/adding walls, bathrooms, kitchens, HVAC, and outfitting each unit with separate electrical meters. On the exterior, we added covered porches, walkways and security cameras. We completed the work July 3rd. The total conversion took four months. Pictures below of pre and post work: